Big Retail Chains Buff Up Rewards to Compete for Your Holiday Business

As holiday shopping season kicks into gear, retailers are going into overdrive in the battle for your bucks. And with daily deal web sites like Groupon and mobile shopping apps offering so many deals to online shoppers, the big stores are even more desperate to get you through the door.

Many stores are launching new -- and sometimes untested -- loyalty programs, offering cash back or discounts as rewards for shoppers. Sister retailers Sears and Kmart (SHLD) will start offering shoppers 5% back on holiday purchases in-store or online. The program started on Sunday, and will run through Jan. 28 at Sears, but will continue year-round at Kmart, as "the Kmart shopper tends to be more financially pressed than the Sears shopper," says Dave Friedman, senior vice president and president of marketing at Sears Holdings.

Meanwhile, Walmart (WMT), which has been in a sales slump all year, kicked off a Christmas Price Guarantee initiative this month, just as Toys R Us launched what it calls its "biggest rewards program ever." Toys R Us is offering its Rewards "R" Us members a complimentary 2012 Super Savings Pass when they spend $200 or more from Sunday Oct. 30 to Dec. 24. The pass offers members more than $100 in savings in the form of exclusive coupons sent via email each month in 2012. Members can also earn 10% back in "R" Us Dollars for every dollar spent on qualifying holiday products.

With Walmart's Christmas Price Guarantee program, if a shopper buys a product at the chain between Nov. 1 and Dec. 25, only to find that same product advertised for less at another retailer, Walmart will grant that shopper a gift card for the difference through Dec. 25. The program is a first for the retailer.

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Unlike straight-up sales, percent-back and rewards programs like these are designed to give shoppers permission to buy more, says Laura Gurski, head of the retail practice for A.T. Kearney, the management consulting firm

Aware that their customers are battle-scarred by recession retailers are feeling the pressure to compete, says Matthew Keylock, senior vice president, new business development and partnerships for Dunnhumby, which creates customer loyalty programs for retailers like Macy's (M). Keylock says that customers today are "distracted" by all the deals cropping up online.

While Walmart's new shopping incentives -- like the other new programs -- are offered online, they're also designed to get shoppers spending in their brick-and-mortar stores, Gurski says.

During holiday 2010, "online retail really stole the show" from brick-and-mortar stores, she says.

In order for retailers to have a happy holiday this season, "stores need to get the foot traffic."

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